Chambers Global Practice Guides: Insurance 2018

IRELAND
LAW AND PRACTICE: p.3
Contributed by Matheson
The ‘Law & Practice’ sections provide easily accessible information on
navigating the legal system when conducting business in the jurisdic-
tion. Leading lawyers explain local law and practice at key transactional
stages and for crucial aspects of doing business.
DOING BUSINESS IN IRELAND: p.99
Chambers & Partners employ a large team of full-time researchers (over
140) in their London office who interview thousands of clients each
year. This section is based on these interviews. The advice in this section
is based on the views of clients with in-depth international experience.
CHAMBERS
Global Practice Guides
Ireland – Law and Practice
Contributed by
Matheson
Insurance
2018

IRELAND
LAW AND PRACTICE: p.3
The ‘Law & Practice’ sections provide easily accessible information on
navigating the legal system when conducting business in the jurisdic-
tion. Leading lawyers explain local law and practice at key transactional
stages and for crucial aspects of doing business.

Law and Practice IRELAND
Contributed by Matheson Authors: Sharon Daly, Darren Maher, April McClements
3
Law and Practice
CONTENTS
1. Regulation p.5
1.1 Regulation of Insurers and Reinsurers p.5
1.2 Domestic Developments and Impact of
Standards p.5
2. Distribution p.6
2.1 Insurance and Reinsurance Products p.6
3. Overseas Firms Doing Business p.7
3.1 Overseas-Based Insurers and Reinsurers p.7
4. Transaction Activity p.8
4.1 Mergers and Acquisitions Activities p.8
5. Insurtech p.9
5.1 Insurtech Development and Collaborations p.9
5.2 Regulator’s Response to Insurtech Issues p.10
6. Emerging Risks and New Products p.10
6.1 Risks and Regulator’s Reponse to Risks p.10
6.2 Addressing the Emerging Risks p.11
7. Recent and Forthcoming Legal Developments p.12
7.1 Legal Developments and Impact p.12
8. Other Developments p.14
8.1 Promoting Alternative Risk Transfer p.14

IRELAND Law and Practice
4
Matheson is headquartered in Dublin with offices in London,
New York, Palo Alto and San Francisco, more than 650 peo-
ple work across Matheson’s five offices, including 80 partners
and tax principals and over 350 legal and tax professionals.
Matheson concentrates on serving the Irish legal needs of in-
ternationally focused companies and financial institutions do-
ing business in and from Ireland. Matheson’s clients include
the majority of the Fortune 100 companies and over half of
the world’s 50 largest banks. Matheson has worked closely with
some of the world’s largest tech multinationals and high-pro-
file start-ups advising seven of the top ten global technology
brands. Our strength in depth is spread across more than 20
distinct practice areas, including asset management and invest-
ment funds, aviation and asset finance, banking and financial
services, commercial litigation and dispute resolution, corpo-
rate, healthcare, insolvency and corporate restructuring, insur-
ance, intellectual property, international business, structured
finance and tax. This broad spread of expertise and legal know-
how allows us to provide best-in-class advice to clients on all
facets of the law.
Authors
Sharon Daly heads the Commercial
Litigation Insurance team which is
described by legal directories as “second to
none”, with Sharon being personally
commended for her ability to respond
creatively to complex issues. Sharon and
her team have been involved in some of the most signifi-
cant commercial litigation before the Irish courts in the
last ten years, including defending a major financial
institution in a multi-billion, multi-jurisdictional dispute
arising from investment in Bernard L. Madoff’s business.
Sharon also acted for insurers in the largest property
damage dispute to come before the Irish courts in relation
to the liability of hydro-electrical dams and flood damage
arising therefrom. Sharon and her team advise a wide
range of clients on insurance issues including policy
wordings, coverage, policy disputes, defence of large
complex claims and subrogated recovery actions. As a
member of Matheson’s Brexit Advisory Group and a
council member of the Dublin Chamber of Commerce,
Sharon is working with Government and other key
stakeholders to encourage UK-based multinationals to
relocate to Dublin in order to facilitate the growth of
Dublin as a leading global business centre, building on
Brexit and beyond.
Darren Maher is a partner and Head of
Financial Institutions Group at Matheson.
He has advised a wide range of leading
domestic and international financial
institutions on all aspects of financial
services law and regulation including
establishment and authorisation, development and
distribution of products, compliance, corporate govern-
ance and reorganisations including cross-border mergers,
schemes of arrangement, portfolio transfers and mergers
and acquisitions. Darren is a member of the firm’s Brexit
Advisory Group and is advising a significant number of
the world’s leading financial services firms on their plans
to establish a regulated subsidiary in Ireland in order to
maintain access to the EU single market following the
United Kingdom’s exit from the EU. Darren frequently
publishes articles in financial services publications.
April McClements is a Partner in the
Insurance and Dispute Resolution team.
April is a commercial litigator and
specialises in insurance disputes. April
advises insurance companies on policy-
wording interpretation, complex coverage
disputes (in particular relating to financial lines policies),
D&O claims, professional indemnity claims, including any
potential third-party liability, and subrogation claims.
April manages a significant number of professional
indemnity claims for professionals, including insurance
brokers, architects and engineers, for a variety of insurers.
April has been involved in obtaining High Court approval
for various insurance portfolio transfers and/or schemes of
arrangement arising from reorganisations and/or mergers
and acquisitions involving life, non-life and captive
insurers. April also works in the area of general commer-
cial litigation with a particular focus on contractual
disputes, most of which are litigated in the Commercial
Court. She is also a strong advocate of ADR and has acted
for clients in mediations and arbitration.

5
1. Regulation
1.1 Regulation of Insurers and Reinsurers
Ireland has a strong and efficient risk-based prudential regu-
latory framework which is internationally respected and fo-
cuses on the application of the proportionality principle. The
Central Bank of Ireland (the “Central Bank”) has primary
responsibility for the prudential supervision and regulation
of insurance and reinsurance undertakings in Ireland. The
Central Bank carries out its role through monitoring and
on-going supervision, and in particular by issuing standards,
policies and guidance, with which (re)insurance undertak-
ings are required to comply.
The Central Bank oversees the corporate governance func-
tions, risk management and internal control systems of (re)
insurance undertakings without placing burdensome ad-
ministrative requirements on their operators. Such under-
takings are required to submit annual and quarterly returns
on solvency margins and technical reserves. The Central
Bank also conducts regular and themed inspections across
the (re)insurance sectors.
The Central Bank operates a rigorous authorisation process
and conducts fitness and probity assessments of individuals
who are to hold certain designated management functions
and positions within authorised firms. The Central Bank also
has responsibility for consumer protection issues.
The Central Bank’s administrative sanctions regime provides
it with a credible enforcement tool, and acts as an effective
deterrent against breaches of financial services law.
From an approach perspective, the Central Bank has adopted
the “Probability Risk and Impact SysteM” (PRISM), which is
a systemic risk-based framework against which the Central
Bank assesses supervisory requirements, ie entities that are
categorised as being high-impact under PRISM are subject
to a higher level of supervision by the Central Bank.
The ratings are set according to the systemic risk posed by
regulated entities, and firms are categorised as either high-
impact (including ultra-high), medium-high, medium-low
or low. PRISM recognises that the Central Bank does not
have infinite resources, and selectively deploys supervisors
according to a firm’s potential impact and probability for fail-
ure. Although relatively few in number, high-impact firms
are the most important for ensuring financial and economic
stability and are therefore subject to a higher level of super-
vision.
The Irish Insurance Industry Federation Code of Practice
(“IIF Code”) is also relevant to the regulation of insurance
and reinsurance undertakings. The IIF Code is a volun-
tary code of conduct that protects policyholders resident
in Ireland and insured in their private capacity. It has been
adopted by members of the Insurance Industry Federation,
which is the representative body for insurance undertakings
in Ireland.
1.2 Domestic Developments and Impact of
Standards
EU Directive 2009/138/EC (Solvency II) came into effect
on 1 January 2016 and was transposed into Irish law by the
European Union (Insurance and Reinsurance) Regulations
2015 (the “2015 Regulations”), introducing a risk-based ap-
proach to the supervision of (re)insurers, its principal ob-
jective being the protection of policyholders. The Solvency
II regime was an attempt at harmonising the prudential
regulation standards applicable to (re)insurance undertak-
ings across Europe. The Solvency II Regulations establish
new capital requirements, valuation techniques, and govern-
ance and reporting standards; they also increase the Central
Bank’s supervisory responsibilities.
On 28 March 2017, the Central Bank published its Con-
sumer Protection Risk Assessment (“CPRA”) model, based
on a review of a number of regulated entities in 2016. Its
purpose is to enhance the manner in which regulated en-
tities manage “the risks they pose to consumers and ensure
they have appropriate risk management frameworks to deliver
for their customers”. (Re)insurance companies will need to
implement a consumer protection risk management frame-
work that is tailored to the nature, scale and complexity of
their business. The Central Bank will assess the effective-
ness of these internal management frameworks through tar-
geted CPRAs, which are in addition and supplementary to
the Central Bank’s PRISM (as discussed above) and regular
thematic inspections.
At a European level, the Insurance Distribution Directive
2016/97 (“IDD”) recasts and will repeal the Insurance Me-
diation Directive 2002/92, which was transposed into Irish
law by the European Communities (Insurance Mediation)
Regulations, 2005 (the “IMR”) and which currently regulates
point of sale insurance products and creates a single market
for the sale of insurance products. The IDD came into force
on 22 February 2016 and must be transposed into Irish law
by 23 February 2018.
The IDD is a minimum harmonising directive, which cre-
ates a minimum legislative framework for the distribution
of insurance and reinsurance products within the EU with
the aim of facilitating market integration and enhancing
consumer protection. It aims to further enhance consumer
protection and ensure a level playing field by extending the
scope of the IMR to include all sales of insurance products.
It will also seek to identify and mitigate conflicts of inter-
est, particularly in the area of commission, and strengthen
administrative sanctions. The IDD applies to all natural and

6
legal persons engaged in the distribution of insurance and
reinsurance products, including insurers and reinsurers that
sell insurance products directly without the use of an in-
termediary. As such, it will have considerable effect on the
regulation of (re)insurance undertakings / intermediaries /
brokers.
2. Distribution
2.1 Insurance and Reinsurance Products
The distribution or sale of insurance products is currently
governed by the IMR, which applies to persons engaged
in insurance mediation business in the Irish market, such
as agents, brokers and bancassurance operators. However,
insurers can also distribute insurance products directly to
customers.
Under the IMR, insurance mediation is broadly defined as
“any activity involved in proposing or undertaking prepara-
tory work for entering into insurance contracts, or in assisting
in the administration and performance of insurance contracts
that have been entered into (including dealings with claims un-
der insurance contracts).” A number of activities are specifi-
cally excluded from the definition of insurance mediation,
such as an activity undertaken by an insurer or an employee
of such an undertaking which includes the provision of in-
formation on an incidental basis in conjunction with some
other professional activity, as long as the purpose of that
activity is not to assist a person to enter into or perform an
insurance contract, nor does it involve the management of
claims of an insurance undertaking on a professional basis,
or loss adjusting or expert appraisal of claims for insurance
undertakings.
(Re)insurance brokers/ intermediaries must be authorised
by the Central Bank in order to carry out the activity of
(re)insurance mediation or to advise consumers in relation
to general insurance products, life assurance products, or
health and medical insurance products, or to act as an insur-
ance intermediary on behalf of an insurance company with
which they have an agreement or carry out certain specified
activities, eg, loss assessing or assisting consumers in dealing
with claims under insurance contracts.
(Re)insurance brokers/ intermediaries are subject to on-
going prudential monitoring of their compliance with the
registration requirements, which includes completing an an-
nual return and holding an adequate policy of professional
indemnity insurance. The Central Bank maintains a register
of authorised (re)insurance intermediaries in Ireland.
Various types of distributors are active in the Irish market,
ranging from (re)insurers and captives to intermediaries
such as brokers and agents, including sophisticated interme-
diaries acting as managing general agents, as well as smaller
intermediaries. In addition, some insurers sell insurance
products directly to customers via direct sales. A current
trend observed in the Irish market is that almost all Irish
financial institutions have some form of tie-up with key Irish
insurance players who are appointed on their behalf to sell
either general or life insurance products to their customers.
(Re)insurance products can be marketed or sold in Ireland
to any person by authorised insurers and reinsurers. Dis-
tributors of insurance products must comply with the Cen-
tral Bank’s revised Consumer Protection Code 2012 (the
“CPC”), which is a set of general principles and detailed re-
quirements that apply to the provision of financial products
and services, giving information and advice to consumers
regarding the advertisement of financial products/services
and the handling of complaints, and applies to the sale of
insurance products to consumers in Ireland. The CPC in-
creased protection for consumers in a number of key areas,
such as arrears handling, errors and complaints resolution
and the mis-selling of products, while also introducing addi-
tional provisions designed to protect vulnerable consumers.
(Re)insurance undertakings involved in the distribution
of insurance products must also comply with the national
general good provisions that regulate the manner in which
such undertakings may sell and market insurance products
to consumers in Ireland, as set out under the following:
• the Consumer Protection Act 2007;
• the Sale of Goods and Supply of Services Act 1980;
• the European Communities (Unfair Terms in Consumer
Contracts) Regulations 1995; and
• the European Communities (Distance Marketing of Con-
sumer Financial Services) Regulations 2004.
The Irish Investment Intermediaries Act 1995 (“IIA”) gov-
erned this area before theintroduction of the IMR. The IIA
has not been dis-applied and continues to govern the reg-
ulations of intermediaries, despite the IMR. As such, two
pieces of Irish legislation govern intermediaries operating
in Ireland, and insurance intermediaries should continue to
comply with the provisions of both.
The IMR will be significantly overhauled by the IDD, which
will extend its scope to cover all distributors of insurance
products. The IDD must be transposed into Irish law by
23 February 2018. As above, the IDD creates a minimum
legislative framework for the distribution of (re)insurance
products within the EU, with the aim of facilitating market
integration and enhancing consumer protection. The IDD
will repeal the IMR and extend the existing legislation, with
the effect that all participants involved in the sale of insur-
ance products previously not in the scope of the IMR – ie,
distributors of products selling directly to consumers with-

7
out the use of an intermediary, as well as to participants in
the market that distribute products on an ancillary basis (eg,
car rental companies and travel agents) – will be required to
register with the Central Bank. Certain activities are specifi-
cally excluded from the IDD’s application, including claim
management on a professional basis, loss adjusting, expert
claim appraisal and the mere provision of information if no
additional steps are taken by the provider to assist in the
conclusion of an insurance or reinsurance contract. The
IDD also provides for a carve-out for ancillary intermediar-
ies offering connected insurance contracts below a certain
threshold.
3. Overseas Firms Doing Business
3.1 Overseas-Based Insurers and Reinsurers
Licensing of (Re)insurance Companies
Undertakings wishing to carry on (re)insurance business in
Ireland must obtain authorisation from the Central Bank or
another EU regulator through the “single passport” regime.
The authorisation process involves an applicant making an
application for authorisation to the Central Bank, pursuant
to the European Union (Insurance and Reinsurance) Regu-
lations 2015 (the “2015 Regulations”), which implemented
the Solvency II Directive in Ireland. As part of this process,
a preliminary meeting is held with the Central Bank and
then an application is submitted, together with supporting
documentation.
The Central Bank has established a process for dealing with
applications for authorisation of (re)insurance undertak-
ings. It has published both a checklist for completing and
submitting applications for authorisation under the 2015
Regulations (the “Checklist”), and a guidance paper to assist
applicants. The application comprises the completed Check-
list and a detailed business plan, together with supporting
documents (collectively, the “Business Plan”).
The principal areas considered by the Central Bank in evalu-
ating applications include the following:
• legal structure;
• ownership structure;
• overview of the group to which the applicant belongs (if
relevant);
• scheme of operations;
• system of governance, including the fitness and probity of
key personnel;
• risk management system;
• Own Risk and Solvency Assessment (“ORSA”);
• financial information and projections;
• capital requirements and solvency projections; and
• Consumer Issues (eg, Minimum Competency Require-
ments and Consumer Protection Code).
A high-level overview of the application for authorisation
process is as follows:
• arrange a preliminary meeting with the Central Bank to
outline the proposals, at which the Central Bank will pro-
vide feedback in relation to the proposal and identify any
areas of concern that should be addressed before the ap-
plication is submitted;
• prepare and submit the completed Checklist and Business
Plan;
• dialogue with the Central Bank. The application process
is an iterative one involving contact and consultation with
the Central Bank after an application is formally submit-
ted. During the review process, it will typically request ad-
ditional information and documentation, and is likely to
have comments on certain features of the proposal. The
Central Bank may seek additional meetings with the ap-
plicant as part of this process in order to discuss aspects of
the proposal in further detail;
• the authorisation committee of the Central Bank considers
the application;
• once the Central Bank is satisfied with the application, it
will issue an “authorisation in principle”, which means that
it is minded to grant its approval once certain conditions
are satisfied; and
• once all conditions are satisfied, the Central Bank will issue
the final authorisation and the (re)insurer can commence
writing business in Ireland.
The Central Bank will issue a formal authorisation once it is
satisfied that the capital requirements and any pre-licencing
requirements have been met. Throughout this process, the
applicant will typically meet with Central Bank representa-
tives on a number of occasions and the Central Bank may
request additional information. From the submission of the
formal application to the Central Bank through to receipt
of the final authorisation takes in the region of four to six
months. The Central Bank does not currently charge a fee
for licence applications.
The 2015 Regulations have been amended to clarify the ex-
emption for third-country reinsurers which was welcomed
by the industry. Third-country reinsurers can carry on rein-
surance activity in Ireland without the need for authorisation
from the Central Bank.
Freedom of Establishment or Freedom of Services Basis
No further licences or authorisations are required, provided
that an undertaking operates within the scope of its authori-
sation and complies with the ongoing requirements of the
Central Bank.
Any (re)insurance undertaking authorised to carry out its
activities may establish branches in other EU Member States
(“freedom of establishment”) or operate in these countries

8
on a freedom to services basis, provided that the relevant
notifications are made to their home state regulators, in ac-
cordance with the 2015 Regulations, who will then inform
the Central Bank. Such undertakings must be advised of na-
tional general good requirements and the CPC.
Special Purpose Reinsurance Vehicle
A reinsurance provider can establish a special-purpose re-
insurance vehicle (“SPRV”), which provides a quicker and
simpler route to authorisation and reduces the extent of su-
pervision compared with fully regulated reinsurers.
Establishing a Third Country Insurance Branch in Ireland
The Solvency II regime facilitates a non-EEA insurer estab-
lishing a branch operation in an EEA Member State, subject
to meeting specific regulatory requirements (a “Third Coun-
try Branch”). This option has stimulated interest among UK
insurers with existing Irish branches when considering their
Brexit contingency plans, as the UK will be regarded as a
“third country” post-Brexit.
Significantly, a Third Country Branch does not have the right
to passport into other jurisdictions like an EEA subsidiary
and, accordingly, it would only be permitted to write busi-
ness in the jurisdiction in which it is established. Clearly, es-
tablishing a Third Country Branch may not then represent a
comprehensive solution for UK insurers seeking to maintain
their access to the Single Market, unless such an insurer es-
tablishes a Third Country Branch in each of the EEA Mem-
ber State territories in which it currently writes business.
That being said, for UK insurers with existing branches in
EEA Member States, the Third Country Branch model may
warrant close consideration.
Similar to the previous regime, an insurer wishing to carry
on business in another EEA Member State on a freedom of
establishment basis is required to submit a notification to
the Central Bank of their intention to do so. Within three
months of receiving a completed application from the in-
surer, the Central Bank will communicate this information
to the national supervisory authority of the Member State in
which the proposed branch is to be established, along with
a certificate of solvency that confirms that certain require-
ments are covered by the insurer concerned.
Non-Admitted Basis
Under Solvency I it was possible for third-country reinsurers
to write business in Ireland on a non-admitted basis sub-
ject to compliance with certain conditions. However, these
provisions were not carried over into Solvency II. The mar-
ket has viewed this as an oversight in the legislation and
there has been ongoing lobbying by the insurance industry
to have the 2015 Regulations amended in order to permit
third-country reinsurers to write business in Ireland on a
non-admitted basis, as was originally provided for under the
Solvency I regime.
4. Transaction Activity
4.1 Mergers and Acquisitions Activities
Increased levels of insurance industry M&A activity are
anticipated in 2017, compared to 2016 levels. While the
lack of clarity about specific proposals under Brexit and
the proposed changes to the US financial services industry
regulations and tax code may be a short-term inhibitor of
insurance M&A, once clear, some of the changes may drive
increased deal-making as the year progresses.
In 2017, there has been an interest in the run-off insurance
market, with many deals involving the transfer of a closed
book of business through a share/asset purchase or by port-
folio transfer. It is anticipated that the interest in run‑off will
remain. In the short‑to‑medium term, Solvency II will con-
tinue to generate run‑off disposal and restructuring activity,
which should lead to an increased number of transactions.
Looking forward, in the context of insurance M&A, the dis-
ruptive impact of InsurTech may result in increased M&A
activity as the market evolves and insurers are obliged to
invest in resources that enhance scale, growth and efficiency.
Many of these InsurTech start-ups are extremely valuable,
and it is likely that there will be acquisitions in this subsector.
In the aftermath of the UK’s decision to leave the European
Union, many financial services companies are now looking
to establish a subsidiary in a country with access to the Single
Market in order to mitigate the potential loss of passport-
ing rights post-Brexit. Authorisation-related activity since
the Brexit vote has continued to increase, including queries
regarding insurance authorisations.
Following the Brexit vote, (re)insurance companies are con-
sidering their options and developing plans to ensure they
are fully prepared in the event of a ‘hard’ Brexit. Since 2008,
several overseas (re)insurance groups have chosen Ireland as
the headquarters for European business, including Beazley
Group, XL Capital, Willis Group Holdings and Zurich. Oth-
ers have restructured to underwrite their “Europe ex-UK”
business from Ireland.
While outbound investment remained a chief characteristic
of the Irish M&A landscape in 2016, the value of inbound
investments increased dramatically. Compared with 2015,
the number of inbound deals remained static at 79, but the
value rose 69% to a total of EUR26.2 billion. Furthermore,
Ireland saw a higher percentage of inbound M&A in 2016
than either the United Kingdom or France which signifies
that foreign buyers still view Ireland as an investment des-

9
tination and is a testament to the international nature of
the Irish M&A market. The inbound investors came from
North America, Europe and Asia-Pacific, with the largest
cross-border deals being concentrated in Ireland’s strongest
industry sectors.
In 2017, it is expected that the aforementioned geopoliti-
cal events will continue to affect Ireland’s M&A landscape.
The full impact of Brexit on M&A remains to be seen, with
the International Monetary Fund (“IMF”) stating that they
expect global economic growth to remain subdued. While
bank lending in Ireland remains inhibited to small and me-
dium enterprises, the significant number of private equity
funds and alternative debt providers may provide alterna-
tive methods for financing mid-market M&A transactions.
Taking into consideration these economic and political fac-
tors, the European Commission still forecasts that the Irish
economy will remain one of the fastest growing economies
in Europe through 2017, and predicts that Ireland’s growth
will continue with 3.6% GDP growth in 2017. This confi-
dence in Ireland’s domestic market will lead to more robust
M&A transactions.
The market or regulatory factors that will or could affect
M&A activities include the following:
• The Companies Acts 2014 (the “Act”) came into force on 1
June 2015 and consolidated Irish company law into a single
piece of legislation, while also introducing significant re-
forms to Irish company law. The changes introduced by the
Act include new domestic procedures to merge and divide
private companies, and a simplified form of private com-
pany limited by shares. The Act has since been amended a
number of times, for example by the Companies (Account-
ing Act) 2017, which transposes Accounting Directive
2013/34/EU into Irish law. The Companies (Accounting)
Act 2017 introduces a new concept of “micro companies”
and relaxed accounting and disclosure obligations.
• The Market Abuse Regulation (EU 596/2014) and the Mar-
ket Abuse Directive on criminal sanctions for market abuse
(Directive 2014/57/EU) became operative on 3 July 2016.
These legislative measures replace the previous regime of
the Market Abuse Directive (2003/6/EC). They form part
of the EU’s agenda for regulatory reform in the area of fi-
nancial services, and are aimed at ensuring transparency
and market integrity.
• The EU (Anti-Money Laundering Beneficial Ownership
of Corporate Entities) Regulations 2016 (the “Beneficial
Ownership Regulations”) transpose elements of the Fourth
Anti-Money Laundering EU Directive (“4AMLD”) into
Irish Law. The 2016 Regulations require a majority of Irish
companies to gather information on individuals who are
their underlying beneficial owners. Information held must
be current, accurate and adequate, and include details of
beneficial interests held. Such companies must maintain
a beneficial ownership register, and the information con-
tained in the register will be filed in the central beneficial
ownership register, once established. Full transposition of
4AMLD is expected later this year.
5. Insurtech
5.1 Insurtech Development and Collaborations
Government bodies such as Enterprise Ireland (“EI”) and
the Industrial Development Authority Ireland (“IDA”),
which work in tandem to attract and support foreign direct
investment in Ireland, have recently been promoting Ireland
as an excellent destination for companies in the Insurtech
industry, as there are many advantages to locating here. Ire-
land is the world’s second largest exporter of software, and
105,000 educated, skilled and multilingual employees are
working in the technology sector.
Eleven of the top 15 global insurers are located in Ireland.
The Irish Government invests EUR700 million annually in
research and development in strategic areas such as software,
data analytics, machine learning and cyber security.
Insurtech offers those operating within Ireland’s domestic
and international insurance industry the possibility to take
advantage of new and emerging opportunities. Historical-
ly, it has received markedly less attention and investment
in comparison to Fintech; for example, in 2015 Insurtech
received EUR2.6 billion in investment compared to some
EUR20 billion for Fintech. Despite this, Insurtech provides
insurers the opportunity to innovate and grow by provid-
ing increasingly sophisticated methods to engage and serve
customers in a unique and distinctive fashion.
The EI and IDA are calling for Insurtech start-ups to receive
funding as part of the government’s financial strategy, the
IFS2020. This strategy seeks to accelerate the growth of high
potential companies with a focus in areas of Insurtech such
as blockchain, the internet of things (“IoT”) and data analy-
sis. At present, there are approximately 120 indigenous Fin-
tech companies in Ireland, and many insurers such as AXA
and Allianz have entered into industry carrier-startup part-
nerships. These start-ups leverage technologies in a manner
that delivers personalised and unique policies tailored to
the consumer. Artificial intelligence, IoT and analytics are
the three chief Insurtech areas driving the disruption, with
the number of deals pertaining to this trio of technologies
tripling between 2012 and 2016, and collectively they ac-
counted for nearly 56% of all 2016 Insurtech deals. These
technologies have the potential to compress the insurance
value chain or better equip insurers, reinsurers and brokers
by more efficiently identifying and quantifying risk through
the use of increasing sophisticated data models.

10
With the large number of diverse domestic and global In-
surtech companies (it is estimated that there may be 1,500
Insurtech companies worldwide), insurers are quickly begin-
ning to understand that Insurtech technology is compatible
with industry processes and can complement their books of
business. The innovative IoT technology and proliferation of
smart devices have allowed insurers to delineate risk more
accurately by relying on new real-time sources of informa-
tion.
The growing presence of Insurtech in the insurance industry
looks set to continue, with the second quarter of 2017 boast-
ing a 148% increase in Insurtech funding to EUR846 million,
when compared with Q2 2016. Furthermore, the European
Insurance and Occupational Pensions Authority have organ-
ised a series of Insurtech roundtable talks, which further
highlights the importance and emphasis being placed on In-
surtech. Domestically, the future of Insurtech looks bright
as Insurance Ireland, the organisation representing 95% of
Ireland’s domestic market, is currently liaising with Massa-
chusetts Institute of Technology to examine innovative new
approaches to blockchain technology as well as forming part
of the IDA Blockchain Expert Group.
5.2 Regulator’s Response to Insurtech Issues
The Central Bank is responsive to the challenges posed by
the regulatory treatment of financial innovations, and enjoys
a reputation as a robust yet business-friendly regulator. The
Central Bank acknowledges the need to strike the appropri-
ate balance between encouraging innovation-related entry
to the market and ensuring that new entrants are sufficiently
ready to fulfil all their regulatory obligations in relation to
financial stability and consumer protection. It is cognisant of
the requirement to keep abreast of the changing technologi-
cal environment and has committed significant resources to
improving its data architectures and establishing quantita-
tive analytical teams in its banking, insurance and markets
directorates.
In addition to these favourable domestic conditions, In-
surtech collaborations and start-ups have an opportunity to
flourish in Ireland as it is unlikely they will be hindered by
excessive regulation. Philip Lane, the Governor of the Cen-
tral Bank, has acknowledged that Insurtech is transforming
into a significant part of the financial system, and is “open-
minded” about extending regulations to it. This openness
and willingness to engage with Fintech and Insurtech start-
ups is not unique to the Governor of the Central Bank, with
past Director of Enforcement Peter Oakes founding Fintech
Ireland to promote Ireland as a hub for Fintech companies.
The Central Bank issued guidance relating to IT and Cyber-
security risks in 2016, which highlighted a variety of emerg-
ing alarming threats. In addition to the recent prolific hack-
ings and ransomware attacks, the Central Bank also drew
attention to the deficiencies regarding IT outsourcing and
IT governance.
6. Emerging Risks and New Products
6.1 Risks and Regulator’s Reponse to Risks
Emerging risks is the name given to new and evolving risks
that are difficult for insurers to assess and typically carry
with them a high degree of uncertainty in regards to their
impact, probability and amount of losses expected. Cyber
risk and longevity risk appear to be the most formidable
emerging risks in Ireland.
Digital innovation and the growing sophistication of digi-
tal technology have led to increased cyber-security threats
and risk of data breaches. The market for cyber insurance is
growing and is seen as one of the biggest growth areas in the
insurance industry globally.
Globally, there is an increasing trend towards risk prevention
rather than insuring against risk. Advanced technology has
created safer cars, drones, driverless cars and smarter devices
that can prevent household damage, thereby mitigating risk
and reducing premiums. Insurers are aware that they need
to adapt to the technological needs of the market or risk
being left behind.
Longevity risk, on the other hand, is the potential risk of
an individual living longer than expected. The financial im-
plications of these exponentially increasing life spans are
colossal. If the average lifespan were to increase three years
more than expected, the cost of supporting such a vast ag-
ing population would increase by 50%. As the mortality risk
looks set to continue to decrease thanks to improving medi-
cal advances, it is clear that understanding the risk associated
with longevity is of crucial importance to insurers. The IMF
has even highlighted the grave implications of this longev-
ity risk for global fiscal stability in their Global Financial
Stability Report.
Considering how quickly life expectancy is increasing, pro-
jecting future liabilities based solely on data extrapolated
from the past is imprecise at best. To address this problem,
certain companies have created insurance subsidiaries to run
their pensions schemes who would then reinsure its longev-
ity risk with a reinsurer; this is expected to be a common
trend in the future. From a reinsurance perspective, buying
this longevity risk may be an attractive financial transac-
tion as it lowers mortality risk and thereby helps balance life
insurance risks. Yet the IMF have stated that the longevity
risk should be appropriately shared between insurers and
governments, as insurers and reinsurers alone may be con-
strained by capital. The 2012 IMF report urged governments
to enhance regulation and provide more accurate data in

11
order to facilitate the development of a more efficient market
for longevity risk transfer.
Increasing innovation in the insurance sector presents a
challenge to the regulator, as the emergence of new tech-
nologies presents both benefits and risks to the consumer.
In June 2017, the Central Bank published a letter to Chief
Risk Officers operating in the insurance industry (the “Dear
CRO Letter”). The Dear CRO Letter sets out findings from
a number of on-site inspections, focusing on the area of op-
erational risk management (“ORM”) in the insurance indus-
try. These inspections were carried out to assess the design,
implementation and operating effectiveness of the ORM
framework as a subset of the Risk Management Framework
of the insurance undertaking subject to the inspection. The
letter sets out examples of both good and bad practices in
the areas of assessment.
The Central Bank is cognisant of its need to understand the
digitalisation of financial services and the new and innova-
tive products and services that have been offered or are in
development by regulated firms in the Irish market, and the
impact of these products/services on consumers in terms
of risk.
The Central Bank published Cross Industry Guidance in
respect of information technology (“IT”) and cybersecurity
risks in 2016, which highlighted a variety of emerging alarm-
ing threats. This guidance notes that the risks associated
with IT and cybersecurity are a key concern for the Central
Bank, given their potential to have serious implications for
prudential soundness, consumer protection, the reputation
of the Irish financial system and financial soundness. The
Central Bank also has a dedicated IT risk inspection team
which has been operational since April 2015. In addition
to the recent prolific hackings and ransomware attacks, the
Central Bank also drew attention to the deficiencies regard-
ing IT outsourcing and IT governance. It was of the opinion
that the cybersecurity risks were exacerbated by boards not
monitoring service levels or performance of service provid-
ers, as well as inadequate due diligence being carried out to
ensure robust agreements. The Central Bank has stated that
these inadequate polices must be addressed, and that work is
required to improve cyber resilience. The difficulty in miti-
gating and insuring cybersecurity risk lies in the fact that it is
a new and emerging catastrophe risk, meaning that insurers
are struggling to understand the total economic scope of
such a cyber attack. Furthermore, as a result of the non-
tangible nature of these attacks, it is often difficult to quantify
and collect complete data, which in turn makes it harder
to aggregate information, delineate risk and identify trends.
However, the Central Bank’s issued guidance outlines the
steps that can be taken to protect against this risk and these
steps will form the basis for its future supervisory work. The
steps are broadly concentrated around risk and governance,
IT strategy and management, as well as service delivery.
6.2 Addressing the Emerging Risks
Cyber insurance is still a relatively new product on the Irish
market, but it has become more popular in recent times and
a number of insurers are now offering new cyber products
in Ireland. It is expected that cyber will be a growth area in
Ireland in the coming years.
Driverless Cars/Autonomous Vehicles
Driverless cars/autonomous vehicles present particular chal-
lenges for the motor insurance industry. The existing driver-
centred Irish legislative framework will need to be updated
to facilitate driverless cars on Irish roads. The UK has pro-
posed a single insurer model for driverless cars, where both
the driver and the driverless technology are insured under
one policy. While this has not yet been considered by the
Irish legislature in any meaningful way, it can be anticipated
that the Irish legislature is likely to follow the UK approach,
given similarities between the existing road traffic frame-
works in both countries.
Drones
Drones are another emerging and rapidly developing tech-
nology, and new legislation is proposed in Ireland to increase
existing drone regulation and impose criminal liability for
certain drone offences. The new bill (the Small Unmanned
Aircraft (Drones) Bill 2017) imposes an obligation on com-
mercial drone operators to have insurance for any liability
arising from drone operation, including potential collisions
with persons or property, and it will be a criminal offence to
operate a drone for commercial use without insurance. As
this market continues to grow, it seems inevitable that drone
insurance will be a growth area.
Blockchain
One example of innovative IT causing disruption in the in-
surance industry is the use of blockchains. These blockchains
form part of a digitalised ledger, which is cryptographically
secure and acts as a transparent and incorruptible source
of data that can be shared amongst insurers. This may aid
fraud detection and risk prevention as it provides a complete
historical record to eliminate errors and allow the verifica-
tion of both customers and policies. Essentially, the use of
these block chains will improve efficiency and enhance cus-
tomer experience by providing superior data quality and se-
curity. Recognising the value in this innovative form of IT,
a number of insurers have launched the Blockchain Insur-
ance Industry Initiative B3i, which seeks to use blockchain
technology to improve industry processes. These insurers
– including Allianz, Munich Re, Swiss Re and Zurich – are
collaborating to improve the impact blockchain may have
across the insurance landscape.

12
Further blockchain development will lead to a marked in-
crease in the development of the IoT, which allows for de-
vices to be connected to a variety of products to collect data
to inform usage-based insurance or provide more accurate
models. Previously, large data centres were required to store,
process and collect the data extracted from this network of
devices. However, blockchain allows the devices to commu-
nicate securely on a peer-to-peer network in an inexpensive
and efficient manner. This data is hugely valuable to insurers,
and IoT devices are currently being employed by motor in-
surers such as Progressive Snapshot, who use the devices to
gather data regarding driving times, distances and speed to
more accurately update their usage-based insurance policies.
In June 2017, the Central Bank published a report on the
digitalisation of financial services, detailing the results of
a survey it conducted on 21 regulated firms described as
the “main players” across the financial services industry, in-
cluding insurance. The survey was conducted to inform the
content of the Central Bank’s Discussion Paper on the CPC
and the Digitalisation of Financial Services (the “Discus-
sion Paper”). The Central Bank is considering the extent to
which the protections under the CPC are working to ensure
consumers are protected in an increasingly digital financial
services environment.
The survey found that the innovative solutions introduced
by the insurance industry to date are spread across the main
product areas for insurance firms in areas such as social me-
dia marketing, social media complaints handling, digital dis-
tribution, mobile payments and secure messaging. A num-
ber of individual insurance firms surveyed were planning to
introduce further innovative uses of technologies, such as
Big Data Analytics, connected/smart contracts, telematics,
artificial intelligence/machine learning, distributed ledger
technology/blockchain and fraud analytics. Most of the large
insurance firms surveyed indicated that innovation hubs are
located at their group headquarters.
The Discussion Paper sets out potential risks to consumer
protection from digitalisation. The following key areas of the
CPC, where consumer benefits and risks from digitalisation
most arise are examined:
• impact on access to financial services;
• provision of information;
• suitability requirements;
• claims and complaints handling; and
• retention of consumer records.
The Discussion Paper launches a four-month period of con-
sultation, closing on 27 October 2017, seeking views from
the industry, consumers and any other interested parties and
stakeholders.
7. Recent and Forthcoming Legal
Developments
7.1 Legal Developments and Impact
Beneficial Ownership Regulations
As above, the Beneficial Ownership Regulations came about
as a result of 4AMLD and require corporate and other legal
entities incorporated in Ireland to hold adequate, accurate
and current information on their beneficial ownership, in-
cluding details of the beneficial interests held, and to keep
and maintain a beneficial ownership register, since 15 No-
vember 2016. Such entities will in due course be required
to file this information with a central beneficial ownership
register once established. It is likely that this beneficial own-
ership information will become publicly accessible when re-
lated measures arising from 4AMLD come into force later
this year.
Insurance Distribution Directive
As above, the EU Commission review of the IMR culmi-
nated in the introduction of the IDD and seeks to create a
level playing field among distributors of insurance products.
Its purpose is to promote market integration and enhance
consumer protection. No implementing measures have yet
been introduced in Ireland, but the IDD must be transposed
into national law by member states by 23 February 2018.
EU Regulation on Packaged Retail and Insurance-Based
Investment Products
In a welcome move, the European Commission agreed
to extend the date of application of the EU Regulation on
Packaged Retail and Insurance-Based Investment Products
(EU 1286/2014 – the “PRIIPs Regulation”), which is to be
supplemented by Regulatory Technical Standards (“RTS”)
specifying the presentation, content and underlying meth-
odology of the key information documents (“KID”). The Eu-
ropean Commission expects the revised PRIIPs framework
to be in place during the first half of 2017, and to apply to
manufacturers and distributors of PRIIPs products as of 1
January 2018. The PRIIPs Regulation is a key piece of legis-
lation, which aims to enable retail investors to understand
and compare the key features and the potential risks and re-
wards of investment products, funds and investment-linked
insurance policies. Alternative investment funds marketing
to retail investors have until 31 December 2017 to comply
with the PRIIPs Regulation. UCITS are currently exempted
from preparing a KID under the PRIIPs Regulation, until
31 December 2019.
General Data Protection Regulation
Ireland’s national implementing legislation, comprising the
Data Protection Acts 1988 and 2003, implements the EU
Data Protection Directive 95/46/EU (the “Directive”) in a
reasonably linear way. The existing data protection frame-
work under the Directive will be replaced by the General

13
Data Protection Regulation (“GDPR”), which will come into
force on 25 May 2018. As a regulation, it will not generally
require transposition into Irish law. The GDPR emphasises
transparency, security and accountability by data controllers
and processors, while at the same time standardising and
strengthening the right of European citizens to data privacy.
Over the course of 2017, the Irish Data Protection Commis-
sioner (the “DPC”) will be proactively undertaking a wide
range of initiatives to build awareness of the GDPR. There is
no indication at this time that the Irish legislature will gold-
plate the new general data protection regulation. It is worth
noting that the DPC has published a Code of Practice for
the Insurance Sector, which sets out how the DPC expects
insurance businesses to implement and apply data protec-
tion requirements.
UK Insurance Act 2015
The UK enacted the Insurance Act 2015 in August 2016.
While the Irish insurance market has traditionally been
closely connected to the UK market, with many Irish risks
written subject to UK law, the enactment of this Act marked
the first significant divergence between UK and Irish insur-
ance law in over a century. It is anticipated that the imple-
mentation of the Act will have an impact on the Irish in-
surance industry, as it is closely connected to the UK (in
particular the London market).
Consumer Insurance Contracts Bill 2017
The Consumer Insurance Contracts Bill 2017 (the “2017
Bill”) was published on 10 January 2017 and passed the sec-
ond stage in the Dáil (the lower house of Parliament) on 9
February 2017. It has now proceeded to the committee stage,
although there is no clear timeline for its implementation.
The 2017 Bill puts on a legislative footing more than 100
recommendations made in a 2015 report by the Law Reform
Commission of Ireland on consumer insurance contracts,
many of which are similar to the changes seen in the UK.
The 2017 Bill proposes the abolition of warranties and re-
placement with suspensive conditions, the introduction of
proportionate remedies, reform of the duty of disclosure,
amendment of third-party rights, the abolition of basis of
contract clauses and the granting of damages for late pay-
ment of claims.
While the 2017 Bill only applies to consumer insurance
policies, the definition of consumer is widely drafted and in-
cludes companies with a turnover of less than EUR3 million.
The Financial Services and Pensions Ombudsman Act
2017
The Financial Services and Pensions Ombudsman Act 2017
(the “FSPO Act”), was signed into law on 26 July 2017 and
amalgamates the offices of the Financial Services Ombuds-
man (“FSO”) and the Pensions Ombudsman into one en-
tity, called the Office of the Financial Services and Pensions
Ombudsman (the “Office”). The FSPO Act also extends the
limitation period for bringing complaints to the Office in
certain circumstances. The limitation period for bringing
complaints to the FSPO in respect of long-term financial
services (including insurance products such as life insur-
ance policies) is now either six years from the date of the act
or conduct giving rise to the complaint, or three years from
either the date upon which the policyholder becomes aware
of a claim, or the date upon which they reasonably should
have been aware (provided the long-term financial service
has not been terminated for more than six years and the con-
duct complained of did not occur prior to 2002), whichever
is earlier. Financial services-providers should also be aware
that the Ombudsman has the power to extend these time
periods where there are reasonable grounds to do so.
The Central Bank and Financial Services Authority of
Ireland (Amendment) Act 2017
The Central Bank and Financial Services Authority of Ire-
land (Amendment) Act 2017 (the “Central Bank Act 2017”)
was also signed into law on 26 July 2017, and strengthens the
functions of the Financial Services Ombudsman as well as
the consumer complaint procedure. Although the FSPO is
more comprehensive, both acts extend the limitation period
for complaints in relation to long-term financial services
under identical terms (see above re FSPO). Both acts also
propose that the FSO/Office will have, for the first time, the
discretion to further extend this limitation period, where it
appears to the FSO/Office that there are “reasonable grounds
for requiring a longer period and that it would be just and
equitable in all the circumstances to do so”. Although it is
somewhat incongruous to have enacted two acts that pro-
pose such similar amendments, the political background
provides an explanation: while the FSPO was initiated by the
Government, the Central Bank Act 2017 began as a private
member’s bill initiated by an opposition party.
Finally, there has been a significant increase in the number of
insurance law decisions emanating from appeals of findings
by the FSO. The courts in Ireland have traditionally been
reluctant to allow insurers to avoid policies; however, in the
recent High Court case of Richardson v Financial Services
Ombudsman & anor, which involved an appeal to the High
Court of an FSO decision, the High Court upheld the FSO’s
finding that an insurer was entitled to avoid a life insurance
policy on the grounds of non-disclosure in circumstances
where there was a strong proposal form to back up the in-
surer’s argument. The decision of the High Court turned
on the strength of the proposal form, and serves as a use-
ful reminder to insurers of the importance of a well-drafted
proposal form.

14
8. Other Developments
8.1 Promoting Alternative Risk Transfer
Brexit
As detailed above, a number of regulatory reforms continue to
dominate the European insurance industry at this time. Brexit
continues to be a key factor affecting the insurance industry,
particularlycompanieslookingtoretaintheirpassportingrights
byestablishingoperationsinacountrywithinthesinglemarket.
Ireland stands to benefit amid the uncertainty in the current
globalpoliticalandeconomiclandscape,withtheCentralBank
reporting an increase in authorisation-related activity since the
Brexit referendum on 23 June 2016. Ireland’s well-established
prudential regulation, common law jurisdiction, and well-
educated, English-speaking and flexible workforce, together
with its close proximity to the UK, have cemented its status as
a thriving hub for the insurance industry. It is anticipated that
the increase in authorisation-related activity will continue, and
the Central Bank of Ireland has increased its workforce by a
quarter in response.
Drones
Compulsory drone insurance for commercial drone opera-
tors is proposed by the Small Unmanned Aircraft (Drones)
Bill 2017. If enacted, this bill will make it a criminal offence
for a drone operator to operate a drone for commercial use
without insurance. See 6 Emerging Risks and New Prod-
ucts, above.
Blockchain
One example of innovative IT causing disruption in the in-
surance industry is the use of blockchains. Essentially, the
use of these blockchains will improve efficiency and enhance
customer experience by providing superior data quality and
security. See 6 Emerging Risks and New Products, above.
Developments Related to Third Party Funding
In May 2017, the Irish Supreme Court confirmed in its deci-
sion in Persona Digital Telephony Ltd & Another v. Minister
for Public Enterprise that third-party funding of litigation is
unlawful, and indicated that any changes to the law in this
regard in Ireland would be a matter for the legislature, not
the courts. However, the Irish High Court has previously
made clear that after-the-event insurance is valid; therefore,
post-Persona Digital, ATE insurance is the only valid third-
party funding in this jurisdiction.
Matheson
70 Sir John Rogerson’s Quay
Dublin 2
D02 R296
Ireland
Tel: +353 1 232 2000
Fax: +353 1 232 3333
Email: dublin@matheson.com
Web: http://www.matheson.com/

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